Clay Shirky's Writings About the Internet
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Biotech's Version of Moore's Law
Like railroad track being laid from both ends of a continent, biology
and information science have been heading towards one another for
years, but it is only recently that the golden spike has been driven
in. Info science's influence on biotech is going to reshape biology in
a way that will catch many by surprise, but make millionaires of those
who prepare for it.
Biotechnology, that once and future empire, has re-emerged from
the shadows to become one of the major headlines of the year. The race
to sequence the genome, the attempts at genetic therapy in humans, and
the recent struggles over genetically modified crops, have made
biotech hot news again, almost as hot as it was in the early 90's. The
burning question about biotechnology is not why this is happening now,
but rather why it didn't happen then. Long before technology investors
had heard the word "Web", biotech was the darling of the stock market,
with prices through the roof, only to see average share prices
stagnate in the middle of the decade with little to show for all the
frenzy.
We've recently started seeing some of the gains we expected in the
beginning of the decade. The difference between then and now is that
in the early 90's biotech was attempting to leverage information
technology, whereas now biotech is succeeding because it has
become information technology. Biology is undergoing the same
revolution information science had mid-century, where mechanical
systems gave way to digital ones, turning IT from a manufacturing
industry concerned with building cash registers and punch card readers
into an industry mainly concerned with intellectual property. As the
price of producing and handling [[the pure information of DNA]] is
falling, the biotech industry is being reformed in ways that should
look familiar to anyone who has been watching the Web.
Similar to Moore's law, the cost of sequencing live DNA into strings
of nucleotide data falls dramatically every year, to the point where a
single lab -- Celera -- has been able to challenge a multinational
consortium of government labs in a race to sequence the human genome,
simply by investing in next-generation sequencing equipment. The net
effect of all this is to split biotech into two camps familiar to the
IT industry: software and infrastructure. As more biologists are
working with pure information, the idea that every biology lab will
buy its own sequencing equipment is giving way to centrally located
clusters of sequencers for hire, clusters which will take the live DNA
and render it into pure information. The idea that every company will
have its own tools for visualizing sequence data is giving way to
biologists paying for access to visualization software over the
Internet. (If distributed DNA sequencing sounds a lot like server
farms, and networked visualizing tools sounds a lot like application
service providers, you're getting warm.)
The revolution we've seen on the Internet can be increasingly
applied to biology, because the effects of separating the data from
its containers is the same for both industry: a class of massive
infrastructure providers will make their money from economies of scale
(think IBM or WorldCom), and will sell their services to thousands of
small companies vying to create the Next Big Thing (think
TheStreet.com or Hotmail). This in turn will alter the economy of the
biotechnology industry almost beyond recognition.
The industry is currently dominated by "Big Pharmas", big
pharmaceutical companies like Monsanto and Pfizer who have the capital
necessary to invest in sequencing and research that a start-up doesn't
have. Where now each research group will build its own lab and buy its
own equipment, the lowered costs of doing business over the Net
coupled with the raised importance of biotech will give huge economies
of scale to 'rendering farms', places that can sequence on demand for
smaller labs with good ideas and little capital. The advantage will
move from the largest companies to the swiftest companies, and the Big
Pharmas will see their role shift to something more like VC firms than
research outfits, picking and choosing among the smaller companies as
an investment strategy. (If the division between capital-intensive
infrastructure companies and idea-intensive software companies looks a
lot like Silicon Valley, you're getting warmer.)
Biotechnology is at a critical inflection point, a transition from
prizing size to prizing speed, and as we know from the early days of
the Web, the people who make the transition early have a good chance
at being around for the long haul. In particular, with the large and
growing importance of pure DNA-sequence information, people who
understand how to build online infomediaries to match people and ideas
will become critical new players. This landscape is already being
populated: companies like HYSEQ with their genesolutions.com site or
Pangea Systems with doubletwist.com are making their bid to be the
Yahoo or Slashdot of the new industry. When this shift happens, pay
attention to the companies who don't have startled looks on their
faces, because they're the ones who stand to profit most from the
revolution.